Tuesday, April 15

Budget 2008

The ruling government’s decision to curb the problems of Indian farmers by giving a waiver of 60K crore is come of as a reprise for the farmers. Now majority of the rural people dependent on agriculture for their income will not have to think of repaying the loans taken and also, there’ll be no need to shelve out anything from their income to return to the loan collectors. So this has come as a huge sigh of relief to our Indian farmers. P Chidambaram has not even put the banks in any kind of dismay by issuing bonds to them in place of the loan waiver done for the farmers. So this 2008 budget has finally something in store for the rural population of the country, as well as for the banks. But it has not dismissed its urban crowd even. The tax slabs has been raised which will benefit men, women and adults the most, as they’ll be having more of savings, and more power to spend the saved salary in an effective manner. So, the government is in a way, all set to fight for the next year elections by gaining the vote bank of not only the poor farmers but of urban crowd as well. The excise duty on goods has been reduced. The bringing down of CENVAT from 16% to 14% has led to reduction in prices of goods which has more affordable for customers to buy. And to add to it, the sixth pay commission and 27% quota for OBC’s acted as an add-on to the budget for the Manmohan Singh’s government. No matter what, but the next year elections will not be an easy job for the rest of the parties as they’ll face a stiff competition from the congress coalition with the majority of the Indian population in their pinky-pocket. All the best to Manmohan Singh’s new cabinet government.

Counter View:
The waiver given to the farmers should have been given in earlier budget years not in the final one which clearly gives a vicarious picture about what’s up in the ruling party’s mind. It’s more of an economic game played by the government to secure their seat for the next year elections as majority of the crowd puller will be dominated by the rural society. The Fm has issued bonds for the banks in successive years, but what if next year the government changes and the new cabinet scrap away this policy of giving bonds. Who will redeem the money of the banks? No, not the government but the population of the country by indirect means. So it’s the common man who will suffer the heat of the loan waiver. Plus, majority of the farmers who took loans were not from banks but from money lenders. So, the government should have taken some constructive thoughts before giving the waiver. The motive to gain the political bank through the financial budget might prove fatal to the present Indian government. The tax cuts given, again is an alarming factor. People will not spend much and the revenue which was supposed to be collected from their expenditure for infrastructure development will not benefit India at all. The tax cuts were done to spur the growth but that is possible only when the incentives were high demand was low. This would have helped in spurring the growth. If the congress government is of the view that increased savings and liquidity enhancements will prompt the salaried generation to spend more in the market, then they are in a wrong belief because more will be the spending, more will be the demand and with shortage or resources and supply, there’ll be inflation as the price of commodities will rise because of increasing power of the generation to spend. This is already putting the government on the back runner. The price of goods have sky rocketed and there’s no stopping for it as the inflation as already cross the 7.41 mark on wholesale price index. How good the picture becomes if one adds the US recession to it. The increase in short term capital gains would have been better then mentioned. More affordable things will become for the Indian population, more will be the rise in inflation. The loan waiver already led to fall in banking stocks in the market. Awards should have been given to the farmers who paid their loans in time and from next time onwards, no loans should be given knowing the fact that farmers won’t be able to pay it later. Reward system should have been adopted. Let’s see, how the congress empire performs in the next elections.

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